that is what i have to say about that. all right. that's my "2 cents more." that's it for tonight. thank you for joining us. receive tomorrow. ♪ lou: good evening. we began this broadcast with a number of developments that have taken place not hours ago, but days. it is unclear tonight whether permission about these developments has been managed, and if so, to what purpose. today two days after the president's election, we learned that two iranian fighter jets, like this one, attacked one of our unmanned an unarmed predator drones. that attack took place 16 miles off the coast of kuwait in international airspace. happened last thursday, but an administration official has remained silent until today. today we learned that boeing

will be slashing another 10 percent of management jobs in its defense division by the end of thii year in an effort to cut more than $2 billion in costs. boeing says it cannot project exactly how many workers will lose their jobs as a result. and boeing is going to some great lengths to insist that these layoffs have nothing to do whatsoever with the sequestered defense cuts set to take place next year. you will recall that less than two months ago the obama white house was so intent on avoiding publicity like this it offered to indemnify government contractors for losses and find if they held off on issuing left notices. that is required by the warrant act until after the election. it is worth noting that boeing ceo james machen any serves on both president obama's jobs council and as chairman of the president's export council. why are we learning about these matters after the election?

and why is this administration, which was want intent on being the most transparent in history, seemingly everything but. he will take that up tonight. the iranian shooting with former u.n. ambassador john bolton and pulitzer prize-winning journalist judith miller. also, the racial divide dominating the presidential race in 2008. some say it was no different this year. what implications does that have for both parties? i will talk with former special counsel to president clinton ronnie davis and wrigley standard writer steven haze. end new signs that big changes are in the offing for president obama's cabinet tonight. fox is correspondent channing greenwell breakdown who is leading an do is staying in just moments. first, two days after his reelection of president obama is now faced with an international incident that some may perceive as an act of war, an incident that occurred five days before the election. for the latest details on our

attempts to shoot down a u.s. truck or international waters to return to fox his national security correspondent jennifer griffin for report. >> aa 4:50 a.m., days before the u.s. president's election, to iranian fu25 fighter jets like these intercepted and fired twice upon an unmanned, unarmed u.s. m-2 one predator drawn of the persian gulf. the first time they have ever fired on a u.s. drone. the shots missed some of the thames, and iranian fighter pilots briefly pursued the drone which landed safely at an undisclosed location. >> it occurred over international waters approximately 16 nautical miles off the coastline. the aircraft was never in iranian airspace. it was always flying in international airspace. the international recognizes territorial limit is 12 nautical miles off the coast, and we never entered the 12 nautical

mile limit. >> asked whether the incident was an act of war, the pentagon spokesman said he would not legally label it, adding the state department had protested through the swiss protective powers, which have represented the u.s. government says the u.s. embassy takeover in 1979. >> the united states has communicated to the iranians and will continue to conduct surveillance over international waters over the iranian gulf consistent with longstanding practice and our commitment to the security of the region. >> in december a classified arkie 170 u.s. and aldrin and crashed inside a round of losing contact with analysts'. they've recovered it, largely intact. the pentagon did not a first disclose details of the more recent run incidence, setting it is classified. meantime, more rising tension is limning farther east with china as president obama prepares for a second term. a new report suggests china is two years away from applying

nuclear ballistic missiles on submarines, missiles with a 4600-mile range. china recently unveiled a second sophisticated stealth fighter jet that industry experts say may have been developed with stolen u.s. technology. that chinese jade 31 stealth fighter has an air intake and wing dimension that is suspiciously similar to the american s35 and a silhouette similar to lockheed martin's f-22 rapture. furthermore u.s. navy officials confirm a russian nuclear-powered attack submarine was detected 300 miles of the east coast of the united states in late october. russia's navy commander announced that on june 1st russian nuclear-powered subs would return to patrolling the world's oceans. lou: fox news national security correspondent. joining me now, former u.s. ambassador.

off the coast of a ron. this was peculiar at best. >> is timing may be coincidental. something to do with the elections. what he said when i asked why this information was not released. because of a classified nature of that activity. then normally would not release this information. i think that is strange credulity, but i do think it did not want to make an active war. they probed, tried to shoot it down, failed. it does not say much for their capabilities. lou: your thoughts. >> well, i think it is outrageous that the justification for not releasing the information before the election was that the mission was classified. it is okay to release today.

i think that demonstrates this is simply a pretext. i think that what we have here is the clear indication that they are prepared to try to shoot down u.s. drones. it did find one u.s. drone on its territory about a year ago. they claim they shot it down. we claim it came down because of defects in the drug itself. obviously it would be a big price for the iranians to shoot down one of ours and be able to prove it this time. lou: go ahead. >> i think the information leaked. that is what the administration is saying, that they were responding to a new story from another cable news network, and that is why there responded that all. let's not have any illusions. we are in a not so covert cold war. someone is killing their

scientists. we already know that the americans have engaged in cyber warfare, yes. there are going to provoke. we are going to probe. both sides don't want an unintended or. at think the important thing to remember here is that you could have a very, very dangerous situation. lou: yet some air force sources are telling fox news that they are very suspicious of this incident as it has been recounted by the bush -- obama administration. and that is, you know, this is a drum that apparently flies about 130 miles-per-hour. issued 25 fighter jets travel just below 600 miles-an-hour. how is it even conceivable that they could not, if they seriously desire to shoot that down, avoid doing so. >> one more point on the intelligence issue.

the normal route is, you say, we don't comment on intelligence matters. in terms of the shootdown, who knows why they could not shoot down. >> that has the smacking, if you will, of a fairy tale. the fact is if there were firing to shoot it down, it is interesting that former military officials would have such a view of the incident itself. let's turn to another issue. that is avoiding war. israeli newspaper and a cbs local news department reporting that valerie jarrett has been actually talking with iranians. the white house knocked that down. rumors persist. >> well, there are lots of partners. photos -- people i've talked to

say that they have not been leading in the delegation anywhere, but as we discussed before the election, i think one can expect how white house push very early and very intensively to get talks going, whether or not they are bilateral talks, 1- someone, or whether they involve the p-5, there will be talks in an effort to get a deal lou: the iranians are going to begin their exercises, drills, air defense drills over the weekend. >> i think this is in part for domestic political consumption to show that they are standing up to the united states and israel. in part it is intended to intimidate the obama administration, but look. efforts to shoot down on an aerial vehicles, the drills, the continued progress of the iranian of their weapons program of go to show that they are not

being slowed down by the sanctions. they have no intention of giving up their nuclear ambitions. if you do not like these actions now, imagine how much more difficult it will be to deal with once it gets nuclear weapons. lou: benghazi, open hearings scheduled for next thursday. are you hopeful that the american public will learn something more and sensitive about what happened and why the u.s. government did not do more to save the lives of four americans. >> surely we should have learned more about this before the election, will we are definitely going to learn more after. this story will not go away. we will finally get some clarity lou: you get the last word. >> well, i think the administration is still going to try and stonewall. we know that a number of cables %-have been pulled out under the guise that there is an investigation going on. i think this could go on for quite some time.

lou: interesting that the state department is making -- well, those documents and cables available. but only through today and tomorrow when, of course, congress is not in washington. to ambassador, thank you very much. much more on the iranian incident. he will take that up the "a-team." the changing faces of the obama second term. trenton, a gartner, panetta, and more could be on our way out. shannon green with the story. the looming fiscal cliff, our economy hanging in the balance. moody's chief economist with us next.

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lou: let's bring you up-to-date correctly on the money and what is happening on wall

street. concernssabout pending tax hikes and budget cuts also known as the fiscal cliff. too much for many investors. stock prices for a second straight session. the dow down another hundred and 20 points. the index down three and three-quarters percent. down 400 points. the s&p down another 70. the loss, now three and a half percent. and nasdaq 42 points. mounting to almost 4%. all three indexes trading under their 200 day moving average. volume, two or three quarter billion shares. negative. nine out of ten stocks. the s&p down. you don't want to see any more negative than that. consumer discretionary information, technology stocks all down. mcdonald's announced it decline in global sales, first decline in nine years.

investors sent the stock down. apple fell to levels it has not seen since mid may, down 1/4 three and and a half percent on reports the company's chinese manufacturer is having trouble keeping up with iphone five demand, meeting apple quality standards at the same time. energy stocks were weak. crude oil rallied. it is now above $85 a barrel. the yield on the ten year, just over 1%. the government narrowly voting to approve the austerity factors require top like the european union and avoid bankruptcy despite violent protest against austerity measures. still, the arrow down to a two month low against the dollar. eu finance minister says, think a lot this for a while, and they decided to delay for weeks the decision to actually give greece any more money. president obama to address the impending fiscal cliff and a statement in the eastern tomorrow added to his schedule late this afternoon. the president is expected to lay

out a number of steps required to keep our economy growing. reduce. i can't tell you how pleased i am to see the president addressing the volatility in these markets and the fundamental issues affecting the economy. the chief economist for moody's economist. >> i would not put my hopes to high. more stagnation and malaise in definitely. the administration takes a more positive approach toward promoting growth. lou: what would that be? >> they might want to pull back on regulation. they may want to pursue tax policies that are more supportive of growth. the first order of business is to resolve these issues surrounding the fiscal clef in a

manner that is going to be constructive for the u.s. economy. lou: to you think that is the reason the market is selling off? >> that is one. relating to the fiscal cliff, the market is very much interested in the manner in which we might resolve the fiscal cliff. will it rely more on tax hikes or spending cuts to take that issue of? lou: something like that, would that work? >> i think it would. a very good chance, but i will add the market is very much concerned about what regulatory policies are going to of look like in the years ahead as they relate to energy. lou: the congressional budget office renewed more warnings on the fiscal cliff. we will be hearing about that, by the way, every day from now until it is resolved. the united states sees a half percent contraction in the economy next year if we go over the cliff.

and it -- on a plan we will surge. what kind of idiots do we have in washington that would not have already resolved this issue before the election? >> i very much hope that will be the case. quite frankly, this latest slide by equity prices could prove to be quite beneficial if it prods washington into taking actions that would prevent the u.s. from going over the fiscal cliff. as far as i am concerned -- lou: something of people looking at their retirement. i'm glad to see five or 6 percent. i am contributing toward rationality and a sense of responsibility in washington. if only it were so. >> that is some markets behave. right now markets are behaving in a very rational manner. basically going to move lower and top policymakers in washington cry uncle out of the fear of long-term employment. lou: i am assuming the you are putting that date to occur somewhere is this side of tell

hell freezes over. >> yes, yes i am. lou: how soon? >> a painful way that you will not enjoy looking. on the other hand, as markets move lower, that is going to damage business and consumer cents a tough sentiment and imply that economic growth is going to be quite low. lou: i will shock you. for whatever reason, and i admit they are entirely instinctual and intuitive and perhaps utterly foolish, but i actually have the sense that something is being cooked up here that will resolve the fiscal cliff well before we look over the heads. always great to have you. >> thank you. lou: new developments in the deadly september 11th attacks and libya. u.s. officials are focusing on a new set of suspects. details for you straight ahead. president obama's cabinet will likely lead very different in his second term. he will replace some of his most

high-profile political allies and cabinet secretary? the report is next. ve lately. but because of business people like you, things are beginning to get rolling. and regions is here to help. making it easier with the expertise and service to keep those wheels turning. from business loans to cash management, we want to be your partner moving forward. so switch to regions. and let's get going. together. if you're a man with low testosterone, you should know that axiron is here. the only underarm treatment for low t. that's right, the one you apply to the underarm. axiron is not for use in women or anyone younger than 18.

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♪ lou: president obama's second term likely to include new faces in the cabinet. the president already replacing the secretary of defense, commerce secretary twice with an intern secretary. commerce secretary rice, and more cabinet posts may need to be filled. speculation rising about who will fill the gaps. fox news correspondent shannon green with our report. >> something i am in the process of trying to determine. >> as attorney-general eric

holder ways to determine whether he will serve a second term obama administration, it is clear the challenges he faced including being held in contempt of congress by the gop-controlled house how factoring into the decision. >> do i have gas left in the tank? it has been an interesting and to four years. i really don't know. >> other key members of the cabinet have already signaled it will not be around for a full eight years, including secretary of state hillary clinton. publicly indicated that she does not intend to stay, sparking speculation about who versus are maybe. early chatter centered on u.n. ambassador susan rice, but her public role and controversial statements in the wake of the bill benghazi attacks could make a potential confirmation process through the senate and a very rocky one. no secret senator john kerry, head of the senate foreign relations committee would be interested in a job, though his open senate seat would trigger another special election in massachusetts. the democrats holding a solid majority in the senate, it could

be something the white house would be open to explore. >> maybe the president is willing to into the possibility of using -- losing a senate seat if you want some bad enough. >> treasury secretary timothy geithner expressed his desire to return to private life. whiskey tax cuts set to expire and sequestration living, his departure is slated to be delayed. >> people like secretary geithner have put a lot of energy into the issues related to the fiscal cliff, and they're going to want to see it through. >> the same is true of defense secretary leon panetta who pled with congress to find a solution to automatic cuts that could be devastating to the pentagon. today a spokesman shot down talk of his departure. >> the secretary is focused squarely on his job today. focused on the missions, the department of defense command not his personal situation.

>> after four years, most cabinet members would simply like to get to their kids soccer games, have a somewhat normal schedule, and return to the private sector or lucrative offers a usually waiting. lou: thank you very much. for some perspective, george w. bush saw nine of his 15 cabinet members resign after his first term. bill clinton, eight of his, ronald reagan lost only four cabinet members after his first term. pretty good. a nor'easter adding to the misery in the northeast, and the cost of hurricane sandy is rising by the date. the obama second term agenda. does anyone know what it is? the "a-team" tonight. straight ahead. president obama's first call after winning his second term went to president bill clinton. a, happened to governor chris christie? former clinton special counsel

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♪ lou: exit polls show a deepen -- deepening racial divide. putting president obama over the top both in the electorate and the strength of support. joining us, former special counsel to president clinton, steven hayes, senior writer for the weekly standard, both fox these contributors. i am uncomfortable saying that this is such a big deal, but the polls suggest something. look at these very quickly. the makeup of the electorate, not appreciable difference from 2008. if we could look at that graphic . 74 percent back end of weight.

72 percent this year. we see the numbers rise slightly . staying about the same. the reality is that the support for president obama of monks in the demographic groups, if we could take a look at that, the support for president obama, i'm sure that this is, you know, very interesting. he lost about four points of support. he lost support as well down 2%. hispanics picked up 4%. asians picked up remarkably. a very small percentage. that does not look like such a big deal because it represents basically what happened in l.a. >> we have to look at politics. this network is trying to explain why he predicted a

romney landslide, and a lot of other conservatives are trying to blame in all on romney. it reminds me of what we democrats winter after 1972. the late and beloved note george mcgovern no longer with us was blamed for the landslide a 72. we lost 80, 84, in '88 and they're still blaming the candid it's. it was not the candid, and it was not the way he communicated. it was the message. it was -- it took bill clinton to redo the map and barack obamacare continued that legacy. the reason why the hispanic vote went for broke, is because bit romney made him look liberal on immigration policy. did not follow george bush's policies and innovation, or you might have been president. it is about content, not the communication. lou: is not one to answer my question on the racial divide.

i will try with you. >> well, i think the numbers speak for themselves. the fact that the electorate this time, the change in the percentages among white voters. if the romney campaign got al, the percentages they thought they needed to we might be talking about a different result . much bigger story to the failure to provide a clear contrast in competing views of the way that the country is going to move toward. lou: a clear contrast. basically the republicans took the day off. they just didn't show up. these are extraordinary numbers, the level of turnover republicans. i'm hearing all of this stuff from have reached to this group, change the message, adopt policies, and all of which may be true. i would support it, but the fact is, that does not look like the reason that romney lost.

does it? >> well, i'm sorry if i did not directly answer your message. that is not the reason. lou: we will catch up. >> they're racial analysis is not the reason that romney african americans supported a fellow african american the same way irish catholics to, but if barack obama had been against helping people who are in the underclass, the lower economic level, if he had not proposed policies that african americans can support then take a look at women. the fact that mitt romney was still talking about the pro-life position and the anti-gay rights position on social issues, he lost because of his message to hispanics because he was in favor of self supporting 11 million people. that is why i mentioned his positions and their substance is

not what i think it -- it means there was contrast. lou: what do you mean? >> there are a number of areas in which there was not enough contrast. if you look at the way that romney talked about taxes, apologetic. very effectively made mitt romney looked like he was going to raise taxes on the middle-class. that was the cry based on this one study. weeks and weeks and weeks. any time the republican candidate is viewed as the tax sector. in many had to defend his position in the debate he was a way out of his way to say, if you are wealthy and all you're not getting any tax cuts, and it was a defensive argument on a fundamental issue rather than pointing president obama had twice argue in public that raising taxes in an economic downturn would doom the economy. the president of the united

states said that and iran on a proposal. lou: two things that seem peculiar. i would love for both of you to respond. i heard a lot of bonn, about the tea party. the tea party did not exist in this election. it was a non factor. why in the world would there be so much concern in the republican party about the tea party. why was there an idea that you're better off today than you were four years ago and pick 2008 as the year, the baseline, and it was a lousy year. in point of fact, just about everybody is. what do you make? very quickly. >> your immediate question, yes, we were better off than the depths of being in a whole. president clinton explained the argument that we were climbing out. by that time election day, the

percentage of people is of the country going in their right correction, saw the economy improving, higher than has been, ronald reagan when he was reelected. lou: i don't have the time. >> he was there. lou: this is the -- why did he call -- mixing his old boss. why did he not call first governor chris christie who gave him the photo op, four and half hours and a big hug there was persuasive to just about 15 percent of the voters. should that not have been his first document. >> probably did not want to run again. facing a lot of questions like those. lou: there are no questions. a man and it is president the gilded photo, embedded in the minds of 15 percent of the voters.

>> i agree. i said that before. as said it would happen. i thought that was going to be a big factor, and it turns out it was. i don't think it ends up deciding the election. lots of other things that ended up, but there is no question that having chris christie give president obama that figurative and literal embrace of the national stage a week before the election when he was the keynote speaker at the republican convention was held to the president's. >> and the your out of time. of all was right on the issue according to the poll and is supported his position. lou: we will take note of two things. your candid one. your former boss played a big part. we would both agree that governor christie probably should have been telling you know, a conference call to the both of them. >> at some point. you have to give some call.

lou: thank you very much. tomorrow much more on the going traps from china. the middle east expert among our guests. up next, the cost of hurricane sandy rising. a snowy nor'easter adding misery to the victims of hurricane sandy. the latest on the recovery and fema. apparently it can be impeded by weather. they actually closed because the weather did not meet their standards of comfort. we will have that for you next. we have big dreams.

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the recent storm bring the total number still to just about three-quarters of a million. not helping at all, at least ten temporary shelters and the new york area take sides of their doors stating there were closed because of the severe weather. let me repeat that the math the messenger closed due to weather. are you kidding? where is governor christie, president obama? we need a photo next to that sign. now that the president has won the united states is helping to advance the treaty for the united nations. we thought so. formants the of the administration widely blamed for derailing the treaty to regulate global arms, but two days after the election, that is no longer operative, and that move is ducking outrage. u.s. officials insist the treaty will not in french. not buying it.

a spokesman telling this broadcast as long as a range in the scope of this tree the nra will do whatever we can to insure it is a nonstarter. i want to give full disclosure. our "a-team" is next. you see us, at the start of the day. on the company phone list that's a few names longer. you see us bank on busier highways. on once empty fields.

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♪ lou: the "a-team" has arrived.

tell me this, what the bleep -- no. [laughter] how much of this election, let us get right to it, should president obama have called the governor christie, too, at least when he called president -- >> the second call should have been to governor christie, and they're is a message, bipartisanship. everyone has spoken of it. now they have to deliver because bottom line the american people want leaders, bipartisanship, and consensus solutions. lou: that is very good. the think anybody should put up with governor christie in the republican party? >> they're very annoyed with him at the moment and if he has any plans to run in 2016, he has a

lot of hard work to do. the first obstacle is getting reelected governor of new jersey which is one of the other big reasons why he embraced president obama. lou: sure. the blue state and a presumed read governor. >> and the people really wanted bipartisanship that it not elect a guy here reached across the aisle and massachusetts but did elect the guy who shoved the health care law that everyone's throat. craving compromise and someone who would reach across the aisle, should have gone for mitt romney. >> run on bipartisanship for the old campaign. it would have been a different campaign can differ result, and a different set of circumstances >> i agree because, remember, barack obama for four years did nothing to reach across the aisle. nothing in this man's background or history or characters it -- to suggest cooperation. something tells me that even though we are facing the fiscal cliff you will see barack obama

the ideologue. lou: in counterpoint, he is going to be talking about economic growth, the fiscal cliff, the deficit, and what to do about it, and he is looking rather quickly. does this surprise you? >> he will talk about it, but if you look at what he did after the midterms, 2010 when we had a landslide victory, did the cave on policy? no. he kept talking. show you what i've done in you will likely. [talking over each other] lou: are you suggesting the obama administration move all the way over? >> getting a deal on revenue and entitlement. >> you use that as a standard. >> absolutely.

>> i might have to joke, but if that were the deal i think probably -- i don't know. i would have to still think about it. both parties are dejected and is better than i am getting a credit for. so catholics go for romney. i love this. this margin. 59-40. the first time they have not played a decided role. >> you know what, i was raised catholic. i don't know if you work, but i have no good answer for this. i poured over this number. an outright war against the catholic church. religious freedom. i think effectively by the conservatives, and still you get this. no explanation. lou: we will be back with women's reproductive rights and the republican party and whether

or not they will be mutually exclusive or whether there will be some rethinking here. we will be right back with the "a-team." stay with us.

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so switch to regions. and let's get going. together. speak ill you know, this election doesn't even come close anything approaching 2010. what happened to the tea party?

>> i think they cost the republican party the election. lou: eliz chris christie. [laughter] >> a severely conservative politician in the party. romney couldn't get back to the center quickly enough and ultimately, that cost him the election. chris christie absolutely. >> and whatever grassroots effort we had to get people to the polls -- whenever we had -- lou: let me repeat that. there was no ground opportunities. >> i'm not as agreeing with you. i'm saying whatever ground game was due to the tea party. lou: john boehner talking with abc saying that there is no tea party pocket. this is a major statement by speaker of the house. >> i feel like there was a

disconnect between what i was seeing on television, which were rallies filled with people, and then these people going to the polls -- lou: when the speaker of the house that there is no -- [talking over each other] there is a lot of division. >> it is still there. i'm not sure he's going to be very effective at doing that, he's trying to rein in the caucus. lou: i think you're right, monica. thank you all for being here tonight. we are going to look at your comments really quickly. where is obama to help the battered northeast? and obama said the best is yet to come, so